How ASML (ASML Holding N.V.) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a semiconductor equipment leader like ASML makes money is essential for investors and anyone interested in the business of advanced chip manufacturing. In this post, we break down ASML's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick ASML Overview

ASML operates as the world’s leading supplier of photolithography systems for the semiconductor industry. Its main products are EUV (Extreme Ultraviolet) and DUV (Deep Ultraviolet) lithography machines, which are critical for manufacturing advanced microchips.
Revenue comes primarily from selling these high-value systems to major chipmakers (like TSMC, Samsung, Intel), and from ongoing service contracts and field upgrades.
ASML’s business segments include: - Net System Sales Revenue (machines and upgrades) - Service and Field Option Revenue (maintenance, support, and optimization)

Revenue Breakdown

• Total Revenue (Q3 2025): $8.785B (+0.7% YoY)
  • Net System Sales Revenue: $6.491B (73.9% of total, -6.3% YoY)
  • Service and Field Option Revenue: $2.294B (26.1% of total, +27.3% YoY)
  • Growth is powered by expanding service contracts and increased demand for field upgrades, offsetting a slight decline in system sales.

Gross Profit and Margins

• Gross Profit: $4.535B (51.6% gross margin)
  • Cost of Revenue: $4.250B (-1.0% YoY)
  • ASML maintains robust margins due to its scalable technology platform, high pricing power, and efficient manufacturing processes.
• Most costs come from:
  • Manufacturing and supply chain
  • Component sourcing
  • Technical support and warranty services

Operating Income and Expenses

• Operating Income: $2.885B (+11% YoY, 32.8% margin)
• Operating Expenses: $1.650B (+4.4% YoY)
  • R&D: $1.296B (+5.1% YoY, 14.8% of revenue) — Focused on next-generation EUV, High-NA lithography, and process control software
  • SG&A: $354M (+2.1% YoY, 4.0% of revenue) — Covers global sales, marketing, and administrative functions
  • ASML continues to prioritize innovation and invest in growth while maintaining operational efficiency.

Net Income

• Pre-Tax Income: $3.000B (+5.2% YoY, 34.1% margin)
• Income Tax: $517M (17.2% effective tax rate)
• Net Income: $2.483B (+2.3% YoY, 28.3% net margin)
• ASML converts a significant portion of sales into profit due to its scalable business model and strong pricing power.

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What Drives ASML's Money Machine?

• Net System Sales Revenue: 73.9% of revenue — driven by sales of EUV and DUV lithography systems to leading chipmakers.
• Service and Field Option Revenue: 26.1% of revenue, up 27.3% YoY — reflecting the growing installed base and demand for upgrades.
• R&D Investment: $1.3B in Q3 2025 — strategic focus on next-gen lithography and process control, ensuring technology leadership.
• Future Growth Areas: High-NA EUV systems and advanced process control software, though not yet profitable, are expected to drive long-term growth.

Visualizing ASML's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after large investments in innovation, 28.3% of revenue drops to the bottom line.

Key Takeaways

• ASML's money comes overwhelmingly from system sales to chipmakers, with a fast-growing service business.
• High gross and net margins illustrate the power of ASML's technology-driven business model.
• Heavy investment in R&D, balanced by efficiency in operating costs.
• Ongoing growth is driven by expanding service contracts and next-generation lithography development.

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FAQ About ASML's Income Statement

1. What is the main source of ASML's revenue in 2025?

ASML generates over 73.9% of its revenue from Net System Sales — selling advanced lithography machines to semiconductor manufacturers. The remaining 26.1% comes from Service and Field Option Revenue, which is growing rapidly.

2. How profitable is ASML in Q3 2025?

ASML reported net income of $2.483B in Q3 2025, with a net margin of approximately 28.3%, reflecting strong profitability driven by high-value product sales and efficient operations.

3. What are the largest expense categories for ASML?

The biggest expenses on ASML's income statement are operating expenses, particularly Research & Development (R&D) at $1.296B in Q3 2025, as ASML prioritizes next-generation lithography and process control. SG&A costs were $354M, supporting global sales and administration.

4. Why does the High-NA EUV segment operate at a loss?

High-NA EUV, despite generating initial revenue, posted an operating loss in Q3 2025 because ASML aggressively invests in R&D and technology development, believing these innovations will drive long-term growth—even if the division is unprofitable today.

5. How does ASML's effective tax rate compare to previous years?

ASML's effective tax rate in Q3 2025 was 17.2%, consistent with previous years. This moderate rate is primarily due to tax benefits from share-based compensation and international structuring.